COVID-19 continues to have an impact on financial markets around the world. This includes the cryptocurrency market. On March 12 the price of Bitcoin plummeted in response to the pandemic making its way to the United States. It has yet to fully recover.
The price drop is bad news for investors, of course, but it is also bad news for miners. In China, where a large number of Bitcoin mining operations are based, many miners have called it quits. The costs of operating Bitcoin mining equipment make it more difficult for miners to make and sustain a profit when the price of the token is low.
China had previously reported in financial publications that miners running antiquated mining equipment were shutting down. Most of these mining farms were using the Antminer S9s. This is an older mining rig that can no longer generate the proper hash power.
The drop in mining seems to have taken place in China. American mining pools seem to be reacting well to the COVID-19 outbreak. This could mean that the majority of farms in the West are using more modern equipment.
To further complicate matters in China the coronavirus outbreak has also disrupted supply chains. This makes it harder for miners in China to purchase new equipment. The long-range takeaway is that China's dominance of Bitcoin mining could be threatened by the pandemic.
China has led the world in Bitcoin mining thanks to low electricity rates and low equipment costs. That could be about to change. Some miners are now considering places where the electricity is even cheaper. Venezuela is a likely target.
The Bitcoin halving that is scheduled for May is only going to make things worse for many Bitcoin miners. When the halving takes place the block reward will be lowered substantially, making it even more difficult to profit from Bitcoin mining.
This is a moment in the history of Bitcoin that will be long remembered. The Chinese response to the COVID-19 pandemic could determine the health of the entire cryptocurrency market.